Pure Leaf debuts zero-sugar innovation as new iced tea brands work to grow the category

The brand’s new product comes as a wave of brands work to give the classic category a refresh.
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Pure Leaf

· 5 min read

Here’s the tea on tea: It’s the second-most consumed beverage in the world, while bottled and canned iced tea specifically is a now $4.6 billion category, per Circana data ending February 25. Like many beverage categories, it’s dominated by a few players—AriZona is nearly neck and neck with Pepsi and Lipton’s joint venture Pure Leaf—though a group of new players are hoping to shake things up.

Pure Leaf, holds just over 21% market share with $988 million in sales, with AriZona just slightly above it with more than $1 billion in sales, per Circana. Coca-Cola’s rival tea brand, Gold Peak, has nearly 13% market share, and Lipton and Pepsi’s Brisk round out the top five. New brands like Honest Tea founder Seth Goldman’s Just Ice Tea, AriZona co-founder John Ferolito’s Saint James, Morgan Wallen’s The Ryl Co., and products from buzzy brands like Liquid Death and Swoon, have recently cropped up, promising better-for-you or sustainably sourced offerings.

But Pure Leaf isn’t resting on its laurels. It’s focusing on innovation like its first zero-sugar offering, Zero Sugar Sweet Tea, which debuted last week. Julie Raheja-Perera, general manager and VP North America of the Pepsi Lipton Partnership, told Retail Brew she is “very bullish around the future of the category.” The swath of emerging brands, focusing on attracting new consumers, are too—so is there room for everyone?

Sip to the trends: Pure Leaf’s Zero Sugar Sweet Tea, sweetened with sucralose and acesulfame potassium (known as Ace K), is a product that came as the company found that 91% of beverage consumers “are looking for zero-sugar options,” Raheja-Perera said, and sugar is the top barrier for consumers picking RTD tea.

“It’s addressing not only a macro need but also a key top need in the category,” she said.

The product is being supported by a new marketing campaign called the “Unbelievably Sweet Files” featuring actors Emily Alyn Lind (who some may recognize from the Gossip Girl reboot) and Celeste O’Connor, stars of the new film Ghostbusters: Frozen Empire, where the two seek to uncover how the zero-sugar drink can be so sweet.

After a campaign with Martha Stewart last year, this campaign could appeal to a younger audience. Raheja-Perera said Pepsi has found that Gen Z is becoming increasingly interested in the category. And despite being at the top of the category, she said Pure Leaf is still prioritizing new products, also releasing a blackberry flavor of its core line.

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“We all know innovation is incredibly important to any category growth,” she said. “It’s important that we continue to play a role and continually adapt and listen to what consumers are looking for, and see into the future for the business.”

Tea change: With this innovation, Pure Leaf is somewhat playing catch-up with emerging brands introducing better-for-you iced tea innovation over the last few years. They’ve been looking to shake up a “relatively boring” category, according to Brad Neumann, president and CEO of iced tea brand Saint James. They’re not just shifting the audience to a new brand, but bringing in new shoppers, too.

Founded in 2021, Saint James is sold in 7,000+ stores nationwide, including Costco, Walmart, and Safeway. The brand is “100% focused on bringing a younger, new incremental shopper to our retail partners,” Neumann told Retail Brew, partly through its use of environmentally friendly Tetra Pak packaging, as well as marketing efforts, like a recent partnership with podcast network Unwell at SXSW.

Saint James isn’t alone: Just a few weeks after Coca-Cola announced plans to discontinue Honest Tea by the end of 2022, its founder Seth Goldman shared his new fair trade iced tea brand, Just Ice Tea, and has since become the fastest growing RTD tea in the natural channel, according to retail data firm SPINS. Last year, country star Morgan Wallen debuted his own zero-sugar sweet tea brand, The Ryl Co., and Liquid Death introduced agave-sweetened iced teas (with cheeky flavor names like Armless Palmer), while Swoon has also gained traction with its zero-sugar iced teas and lemonades. And retailers are open to the new options.

“We meet with distributors and buyers every day. And it’s never, ‘You have to take us or them.’ Rising tides lift all ships,” Neumann said.

These brands are hoping to do what Poppi and Olipop achieved in soda and Celsius in energy drinks—offer a new, better-for-you take on a classic beverage category ruled by big players. This innovation could potentially grow the already huge category that much more, Neumann said.

“The better the category does, the more opportunities for additional brands to get distribution, right?” Neumann said. “[For example] if a buyer of Kroger sees that iced tea is on fire, well maybe that goes from a four-foot set to an eight-foot set, and they can bring in five other brands in iced tea that they weren’t necessarily going to bring in.”

Retail news that keeps industry pros in the know

Retail Brew delivers the latest retail industry news and insights surrounding marketing, DTC, and e-commerce to keep leaders and decision-makers up to date.